Archive for November, 2012

Getting Technical: Weekend Update

Courtesy of Doug Short.

Here’s the latest weekend update from Serge Perreault, a Chartered Professional Accountant and market technician located near Montreal, Canada. Serge has been following the U.S. market in a series of weekly charts. Here is his update on the S&P 500.


The S&P 500 continued its ascension, on improving momentum and on 3% above-average volume but, the index and its ROC momentum indicator are now testing important resistances.


 

 

Note: For newcomers to technical analysis, here are brief explanations for the two key indicators that Serge features:

  • ROC (Price Rate of Change)
  • RSI (Relative Strength Index)

(c) Serge Perreault CPA Inc.

 

 

 

 





Gold And The Potential Dollar Endgame Part 2: Paper Gold, What Is It Good For?

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Authored by Dan Flynn and Joe Yasinski of Gold Bullion International,

Part 2 of 3: “Paper Gold, what is it really good for?”

In our first installment of this series we explored the concept of stock to flow in the gold markets being the key driver of supply/demand dynamics, and ultimately its price. To briefly summarize the STF concept, the “stock” of existing gold is the total amount ever mined and the “flow” is the amount of physical gold available for purchase on any given day. Obviously the more flow, the more for sale and presumably, the lower the price. Today we are going to explore the paper markets and, importantly, to what degree they distort upwardly the “flow” of the physical gold market. We believe the very existence of paper gold creates the illusion of physical gold flow that does not and physically cannot exist. After all, if flow determines price – and if paper flow simulates physical metal movement to a degree much larger than is possible – doesn’t it then suggest that paper flow creates an artificially low price? If the physical metal does not actually flow along with paper representations of flow, then isn’t it true that the current stock to flow ratio may already be much higher than previously imagined?

When we talk about “paper” markets, we are broadly referring to derivative markets; forwards, swaps, and in the case of gold, unallocated gold accounts as well. Derivative markets for commodities were developed to smooth the wild price swings caused by supply gluts or unexpected shortages. The first modern exchange for rice dates back early 18th century Japan. By 1848, the Chicago Board of Trade was formed, originally clearing trade of forward contracts on corn. Consumed commodities tend to exhibit tight supply/demand dynamics so it is easy to understand the necessity for such ‘paper’ markets for legitimate hedging purposes. As discussed in part one, gold is not consumed and given the existing stock and annual mine production – there is an approximate 65 year ‘overhang’ of new mining supply. Can you imagine the need of Cargill to hedge the cost of corn if a non-perishable, 6 decade supply sat in their warehouse? With a relatively massive existing stock of gold, there is no potential supply shock to hedge against…
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Fun and Games and Obvious Manipulation

Fun and Games and Obvious Manipulation

Courtesy of 

Friday's close was the most obviously, nakedly manipulated bullshit close I've ever seen. I have no idea who is behind it but this is not what healthy, well-participated-in markets do. There are too many real players to allow for this kind of thing to be able to happen in a real market. This market we have is shady as hell. I wouldn't even comment on something like the below chart if it were a one-off, but honestly, this feels like it's all the time.

The market is devoid of width and depth, you can jerk it around pretty easily – especially if backed by an institution that borrows free money.  And in the meantime, the powers that be need it to close higher every week to prevent outflows and redemptions. Tyler's take on the close is here, btw:  (Zero Hedge)

That's the way they want it. They get it.

I feel bad for investors and traders who haven't been in this game prior to 2008, when it was real and the mid-day action mattered. Now the whole trading day is irrelevant because the 19 people still left get to close this motherfucker at whatever price they want. On top of which, almost all of the gains this year have come courtesy of gaps in the morning. The whole trading day has just been invalidated at this point.

I don't know…whatever.

Read today's Takeaway at Investment News and have a great weekend!





A Graveyard for Tacticians

A Graveyard for Tacticians

Courtesy of 

Whatever the market historians say about the 2012 stock market years from now, they will certainly have to at least mention how difficult it was for those who practice tactical asset allocation. Not just difficult, actually it was a graveyard.

    I'm going to show you why:

    In 2012, there were very few ways to win and lots of ways to lose if you were doing any kind of market timing at all.

    First of all, you had to have come into the year fully-invested, both barrels loaded.  You also had to have been at least equal-weighted to Apple. Thus, if you had a value-bent (versus a growth-bent) to your allocation, you got smoked. The year's gains are front-end loaded, which means if you lagged that January to April run, you almost never had a chance to catch up.

    Second, there were two major fakeouts for those employing a 200-day or ten-month moving average as a buy/sell signal. The Spring sell-off, driven by Europe, culminated in one of the nastiest bull reversals I've ever seen. You got taken out of stocks only to watch a V-shaped snapback humiliate you within hours - not days but hours!  It was insane.

    By September, the performance chase had pushed the market to a new year high, only to suck everyone back in right before the fiscal cliff / global recession zeitgeist started to make itself felt again.  A horrible earnings season in which "uncertainly" punctuated every conversation had ended with a second fakeout for the tacticians to impale themselves on. Just when it looked as though we were finally going to get a real correction and stocks had broken below the 200-day, the unthinkable happened: The light-volume and shortened holiday week saw one of the most incendiary stock market runs of all time.  In three-and-a-half days the S&P had gained back almost the entire correction in a run that seemingly included no one. Apple alone had ripped from 505 to 590 within what seemed like seconds! Forgetaboutit!

    Once again, trend-followers and timers got smoked before they even knew what had happened. In the time it takes you to open the Yahoo Finance app on your iPad, the reversal had beclowned all but the buy-and-holders.

    Many years from now, people will see the 2012 stock market's 15% return in…
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    China PMI Rises But Misses Expectations For Fifth Month In A Row As Uncertainty Prevails

    Courtesy of ZeroHedge. View original post here.

    Submitted by Tyler Durden.

    China’s Manufacturing PMI missed expectations, coming in at 50.6 relative to a slightly expansionary 50.8 expectation, and up down from the 50.2 prior. This is the fifth month in a row of missed expectations but it has now risen for three months in a row, to the highest level in 8 months; but has now hovered within 0.6pts of the expansion/contraction knife-edge for six months. The PBOC’s index remains above (more positive) than the HSBC version for the 20th month in the last 21 (which remains in the contractionary sub-50 range it has been in for 16 months). With the Shanghai Composite testing Jan 09 lows and the ongoing Reverse Repo delicate bank pumpathon, the relative stabilization in Services and Manufacturing PMIs is confirmed by this evening’s data and provides hope for those bidding H-Shares to 16-month highs. Interestingly for all those who remain shocked at the divergence between the Hang-Seng and the Shanghai Composite, it seems clear that A-Shares investors remain skeptical of the PMI-based stabilization of macro and prefer to trust the weaker (and harder to tweak) Industrial Output data.

    Employment and Input Prices sub-indices fell. New Orders rose modestly but it seems like this month’s pickup was as much about picking up the slack from last month’s backlog than new business.

     

    5 months in a row of missed expectations – but 3 months of expansion…

     

    but remains above the HSBC index…

     

    SHCOMP vs Industrial Production vs Hang Seng

     

    Charts: Bloomberg

     

    Thought for the night… YUM vs SHCOMP…





    Study: American Households Hit 43-Year Low In Net Worth

    WASHINGTON (CBS DC) – The median net worth of American households has dropped to a 43-year low as the lower and middle classes appear poorer and less stable than they have been since 1969.

    According to a recent study by New York University economics professor Edward N. Wolff, median net worth is at the decades-low figure of $57,000 (in 2010 dollars). And as the numbers in his study reflect, the situation only appears worse when all the statistics are taken as a whole.

    According to Wolff, between 1983 and 2010, the percentage of households with less than $10,000 in assets (using constant 1995 dollars) rose from 29.7 percent to 37.1 percent. The “less than $10,000? figure includes the numerous households that have no assets at all, or “negative assets,” which is otherwise known as “debt.”

    Keep reading: Study: American Households Hit 43-Year Low In Net Worth « CBS DC.





    Bill Ackman: “Everything You Wanted To Know About Finance (Except JCP) In Under An Hour”

    Courtesy of ZeroHedge. View original post here.

    Submitted by Tyler Durden.

    Whether you believe he is a one-hit-wonder or an investing wunder-kind, the following 44 minute clip from the activist investor (who is early, not wrong, on JCP, right?) provides investors with some indepth insights into what it takes to finance and grow a successful business and ‘how to make sound investments that will lead to a cash-comfy retirement.’ Of course, there are those who can and “do” grow a business, and those who “invest”… often times with less than stellar (ahem PSIV) results.

     

    00:00:00 introduction
    00:00:57 lemonade stand
    00:03:14 fixed asset and inventory
    00:04:30 assumptions
    00:05:54 growing
    00:08:12 cashflow
    00:09:13 value
    00:11:16 debt and equity
    00:13:11 risk
    00:14:59 rising capital
    00:17:42 valuation
    00:23:56 compound interest
    00:25:37 advice
    00:30:33 barriers for entry
    00:33:34 when to invest
    00:35:49 withstand volatility
    00:37:13 mutual funds
    00:41:24 ending

     





    S&P 500 Snapshot: Friday’s Flat Finish

    Courtesy of Doug Short.

    The S&P 500 started the day with no sense of direction. But an hour into the day we saw a modest selloff to the intraday low, off 0.31%, by late morning. A rally in the final hour took the index to its intraday high, up 0.21%, two minutes before the close. But last-minute selling gave us essentially a flat finish, up 0.02% for the day. For the week the index gained 0.50%, and the month of November finished with a tiny gain of 0.28%.

    Here is a five-minute look at today’s action.


    Here is a two-hour chart for the complete month of November. We see the post-election selloff followed by a rally initially triggered by optimistic comments to the press by Representative Boehner and others about the resolving the Fiscal Cliff.

    The S&P 500 is now up 12.61% for 2012 but 3.38% below the interim closing high of September 14th.

    From a longer-term perspective, the index is 109.3% above the March 2009 closing low and 9.5% below the nominal all-time high of October 2007.

     

     

     

     

    For a better sense of how these declines figure into a larger historical context, here’s a long-term view of secular bull and bear markets in the S&P Composite since 1871.

     

     

     

     





    Ultimate Fiscal Cliff Cheat Sheet Infographic

    Courtesy of ZeroHedge. View original post here.

    Submitted by Tyler Durden.

    The Fiscal Cliff is the name given for the 2013 increase of Federal Government taxes and budget cuts. The Bush-era tax cuts expire and the 2013 "Budget Control Act" kicks in, among other budget cuts & new taxes. The Fiscal Cliff is set to reduce the 2013 US Government budget deficit by roughly half; will remove $607 Billion from economy (GDP), resulting in 4% drop, pushing it back into recession; it can NOT be avoided. It must happen to fix the budget deficit; any delay must be paid for later; it will NOT reduce the US debt, only slow down the growth. The Fiscal Cliff's (new taxes and budget cuts) size and impact are visualized below in physical $100 bills.

     

     

    New Taxes…

    Beginning 2013, Americans are to pay more in taxes.

    Bush era tax cuts, FICA 2% payroll tax cuts & other tax provisions will expire, Obamacare taxes will show up – this amounts for $400 Billion in new taxes.

    Each truck holds $2 Billion, each line is 1.36 miles (7217 feet), for a total truck line length of 2.73 miles, worth $400 Billion.

    This is how it could look if taxes were paid physically, instead of electronically.

    $222.7 Billion Bonus: Corporate Tax Subsidies

    While the taxes are increasing significantly on American citizens, the largest corporations have enjoyed corporate tax loop-holes.

    280 of America's largest companies got $222.7 Billion in tax-breaks between 2008-10, while all of them remained profitable.

    67 of the 207 companies' paid effective three-year tax rate of less than 10 percent-- far from the 35% corporate tax code.

     

    Budget Cuts…

    The Fiscal Cliff will cut $207 Billion out of Government budget: $65 Billion in cuts will come from "Automatic Sequestration", a fancy name for automatic spending cuts that are the consequence of the "Super Committee" failing to come up with a plan to cut $1.5 Trillion over 10 years, which they had to do in order to avoid the "Automatic Sequestration".

    The sequestrations cuts will be divided equally between Defense and Non-Defense spending.

    $26 Billion in cuts will come from the Unemployment Benefit Extension expiring.

    $11 Billion in cuts will come from reduction in Medicare Payment Rates.

    $105 Billion will come from other spending reductions.

     

    Source: Demonocracy





    Business as Usual: The Next Fiscal Cliff

    Courtesy of Russ Winter of Winter Watch at Wall Street Examiner

    More on the fiscal cliff talks: The Presidente’s opening bid - delivered this afternoon by Tim Geithner – calls for a $1.6T tax increase, a $50B economic-stimulus program, and delivering to the WH the power to raise the federal debt limit without congressional approval.  The White House also wants the payroll tax credit to continue and a “permanent” increase in the debt limit.  Lastly, they want to extend emergency unemployment compensation.  It’s a “step backward,” says Mitch McConnell.

    The Presidente apparently graduated from the Fuck U School of Negotiations. Does a real ethical leader send a crook like Geithner to “open” with this particular irresponsible tract when Congress is adjourning on Dec. 14?  This is a deliberate attempt to obstruct the process.  I think we learned a lot about Obama’s second term here. No spending cuts and a token $42 bn from allowing expiration of the Bush tax cuts on those making over $250k is a spit in the ocean in comparison to the $3.6 trillion the government spends each year. Unless the GOP shows a little spine, deficits are going to blow sky high in 2013 and 2014. The overnight markets barely reacted to this. In fact I think the markets are hoping for business as usual, no austerity, no tax increases, just a phony facade. The Presidente is playing to extend all the items above to the next fiscal cliff.

    Bruce Krasting points out that the Sandy request of $80 bn from New York and New Jersey, exceeds the annual payments of disaster relief of $11bn. So the extra $69bn is going to require a special spending bill. Eric Cantor says this extra spending “will need to be properly considered,”  meaning something must offset, or the amounts could also be questioned.
     

    If this wasn’t enough a huge “Pineapple Express” is headed toward the West Coast, and will dump double digit rain over a very large region and in particular Northern California. This could require billions more in disaster relief.

     

     

     

    For additional analysis on this topic and related trades subscribe to Russ Winter's Actionable – risk free for 30 days.The subscription fee is $69 per quarter and helps support Russ.s work on your behalf. Click here for more information.

    Copyright © 2012 The Wall Street Examiner. All Rights Reserved. The…
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    Zero Hedge

    WeWork Board, Softbank Officials Push For CEO Neumann's Ouster

    Courtesy of ZeroHedge View original post here.

    The odds of WeWork co-founder and CEO Adam Neumann becoming "the world's first trillionaire"  maybe about to take another major hit.

    In what appears to be the latest attempt to salvage the farce that is the WeWork IPO (and the massive hole it will leave in Masayoshi Son's balance sheet and credibility), ...



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    Insider Scoop

    Notable Insider Buys In The Past Week: AbbVie, Kraft Heinz And More

    Courtesy of Benzinga

    Insider buying can be an encouraging signal for potential investors.

    A packaged food giant and two drugmakers saw notable insider buying activity this past week.

    Some of this insider buying occurred alongside insider sales.

    Conventional wisdom says that insiders and 10% owners really only buy shares of a company for one reason — they believe the stock price will rise and they want to profit. So insider...



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    Phil's Favorites

    Peloton IPO Guide... And Why It Makes No Sense

    Courtesy of ZeroHedge

    By Scott Willis via Grizzle.com

    BOTTOM LINE

    At the end of the day, Peloton is a gym membership pretending to be a tech company.

    We fully admit the product is exciting and unique in the market, but Peloton still faces the same problem...



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    Digital Currencies

    Buyer beware: How Libra differs from Bitcoin

     

    Buyer beware: How Libra differs from Bitcoin

    Recent revelations about the lack of privacy protections in place at the companies involved in Facebook’s new Libra crytocurrency raise concerns about how much trust users can place in Libra. (Shutterstock)

    Courtesy of Alfred Lehar, University of Calgary

    Facebook, the largest social network in the world, stunned the world earlier this year with the announcement of its own cryptocurrency, Libra.

    The launch has raised questions about the difference between Libra and existing cryptocurrencies, as well as the implications of private companies competing with s...



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    Lee's Free Thinking

    Look Out Bears! Fed New QE Now Up to $165 Billion

    Courtesy of Lee Adler

    I have been warning for months that the Fed would need new QE to counter the impact of massive waves of Treasury supply. I thought that that would come later, rather than sooner. Sorry folks, wrong about that. The NY Fed announced another round of new TOMO (Temporary Open Market Operations) today.

    In addition to the $75 billion in overnight repos that the Fed issued and has been rolling over since Tuesday, next week the Fed will issue another $90 billion. They’ll come in the form of three $30 billion, 14 day repos to be offered next week.

    That brings the new Fed QE to a total of $165 billion. Even in the worst days of the financial crisis, I can’t remember the Fed ballooning its balance sheet by $165 bi...



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    The Technical Traders

    Is A Price Revaluation Event About To Happen?

    Courtesy of Technical Traders

    Skilled technical traders must be aware that price is setting up for a breakout or breakdown event with recent Doji, Hammer
    and other narrow range price bars.  These types of Japanese Candlestick patterns are warnings that price is coiling into
    a tight range and the more we see them in a series, the more likely price is building up some type of explosive price breakout/breakdown move in the near future.  The ES (S&P 500 E-mini futures) chart is a perfect example of these types of price bars on the Daily chart (see below).

    Tri-Star Tops, Three River Evening Star patterns, Hammers/Hangmen and Dojis are all very common near extreme price peaks and troughs.  The rea...



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    Kimble Charting Solutions

    India About To Experience Major Strength? Possible Says Joe Friday

    Courtesy of Chris Kimble

    If one invested in the India ETF (INDA) back in January of 2012, your total 7-year return would be 24%. During the same time frame, the S&P 500 made 124%. The 7-year spread between the two is a large 100%!

    Are things about to improve for the INDA ETF and could it be time for the relative weakness to change? Possible!

    This chart looks at the INDA/SPX ratio since early 2012. The ratio continues to be in a major downtrend.

    The ratio hit a 7-year low a few months ago and this week it kissed those lows again at (1). The ratio near weeks end is attempting to...



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    Chart School

    Crude Oil Cycle Bottom aligns with Saudi Oil Attack

    Courtesy of Read the Ticker

    Do the cycles know? Funny how cycle lows attract the need for higher prices, no matter what the news is!

    These are the questions before markets on on Monday 16th Aug 2019:

    1) A much higher oil price in quick time can not be tolerated by the consumer, as it gives birth to much higher inflation and a tax on the average Joe disposable income. This is recessionary pressure.

    2) With (1) above the real issue will be the higher interest rate and US dollar effect on the SP500 near all time highs.

    3) A moderately higher oil price is likely to be absorbed and be bullish as it creates income for struggling energy companies and the inflation shock may be muted. 

    We shall see. 

    ...

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    Biotech

    The Big Pharma Takeover of Medical Cannabis

    Reminder: We are available to chat with Members, comments are found below each post.

     

    The Big Pharma Takeover of Medical Cannabis

    Courtesy of  , Visual Capitalist

    The Big Pharma Takeover of Medical Cannabis

    As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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    Mapping The Market

    How IPOs Are Priced

    Via Jean Luc 

    Funny but probably true:

    ...

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    Members' Corner

    Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

    Are you ready to retire?  

    For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

    Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

    Still, the stock market has been better over the last 10 (7%) an...



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    Promotions

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    About Phil:

    Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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